Friday, 27 January 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 16

The advance made by Adam Smith over the Physiocrats is that he analyses surplus value in terms of value rather than use value. For the Physiocrats, it is only concrete agricultural labour which is productive, because it is only this labour which creates and provides the basic material required for all other production. It is agriculture, which produces the food which all other producers require, just to exist, it is agriculture which produces the materials which all other industries merely manipulate and transform. For the Physiocrats, the value of all commodities comprises the value of the materials consumed in production, plus the value of the labour used in production, but the value of this labour is only equal to the value of the commodities required for its own production.

These values then are only equal to the physical use values consumed. Surplus value is then only equal to the increase in those use values that arises from the process. For example, if 100 kg of grain is used as seed, and a further 500 kg of grain are required for the consumption of the workers, but 1000 kg of grain are the result of this production, the surplus value is equal to 400 kg of grain. However, its clear that if the value of the seed is 100 kg and of labour 500 kg, the surplus value of 400 kg must have come from somewhere, and for the Physiocrats, it comes as a free gift of nature.

But, Smith is in advance of that for the simple reason that he recognises that value is not use value, but is social labour-time, and that all social labour – in so far as it is socially necessary – is productive. (What it is productive of, will be discussed later in the discussion on productive and unproductive labour.) The advantage that the Physiocrats have over Smith is that they recognise social reproduction as a process of the reproduction of these physical material components, whereas Smith's failure to understand this leads him into the error of his Trinity Formula, whereby all the value of output is reduced merely to that newly created by labour. However, the advantage Smith has over the Physiocrats is that, by understanding value as necessary social labour, he is able to understand that all such labour, and not just agricultural labour produces value, and in the process also produces surplus value.

As Marx indicated earlier, the difference between an analysis based on use value, as opposed to value, could not be obviously seen by the Physiocrats, precisely because of their concentration on understanding a process of social reproduction. Take the following example, based on that given above, but using Marx's categories of constant capital, variable capital, and surplus value.

c 100 kg + v 500 kg + s 400 kg = 1000 kg.

We will assume simple reproduction so that all of this 400 kg of surplus grain is consumed, as rent, by the landlord.

Suppose there is a poor harvest, so that only 600 kg of grain is produced. The advantage of the Physiocrats analysis, as Marx describes, set out in the Tableau Economique, is that they understood that this year's constant capital and variable capital, i.e. the commodities that comprise it, are advanced from last year's production. But, likewise, to ensure social reproduction occurs, on the same scale, this constant and variable capital, to be advanced next year, has to be taken out of the current year's production.

Consequently, if production next year is to take place on the same scale, the same physical quantity of constant and variable capital must be advanced, because it is this physical quantity of capital, and not its value that determines the scale of production. In other words, out of this year's production of 600 kg of grain, 100 kg will again have to be set aside, as constant capital, as seed, and 500 kg of grain will have to be set aside to cover the wages of agricultural workers in the next year.

That means that there will be no grain left, out of this year's production, to constitute a surplus value, appropriated by the landlord. This would seem quite rational for the Physiocrats, because indeed no additional use values would have resulted from this process. 600 kg was what existed, at the start, and 600 kg existed at the end, so although there is no potential to expand production, nor does production contract in the following year.

Had production fallen to 700 kg, a surplus value, equal to 100 kg, would have been produced, and had it fallen to 500 kg. there would not have been enough produced for social reproduction to occur on the same scale. The amount of seed planted would have to be reduced, and the number of labourers employed to cultivate it reduced in the same proportion, determined by the technical composition of capital. Instead of a surplus value being produced, a negative value would have been produced, and the capital would have contracted, as a result.

About Me

Left school at 16. Became an ASTMS shop steward at 19, and a lifelong trade union activist. Delegate to North Staffs Trades Council 1974-87. Secretary North Staffs Miners Support Committee 1984-5. President North Staffs Trades Council 1985-6 and 1986-7. Delegate to Staffordshire Association of Trades Councils 1985-7. Delegate West Midlands Regional Council of the TUC 1985-7. Secretary Newcastle UNISON 2000-2.
Member of the International Communist League/Workers Socialist League 1974-87.
Went to University as mature student at age of 24. Obtained Joint Honours Degree in Economics and Politics with Philosophy and Statistics, followed by a Post Graduate Certificate in Education.
Labour Party member since 1974. Stoke City Councillor 1983-4, expelled from Labour group 1983, and resigned from Council in 1984 because of refusing to vote for rent and rate rises, and budget cuts. Staffordshire County Councillor 1997-2005.
Assistant Secretary Stoke District Labour Party 1981, and held pretty much every position from Executive member, to Branch Secretary, and Branch Chair.